Emotional Tagging and Belief Formation: The Long-Lasting Effects of Experiencing Communism

Christine Laudenbach, Ulrike Malmendier and Alexandra Niessen-Ruenzi

AEA Papers and Proceedings, 2019, vol. 109, 567-71

Abstract: Growing evidence in macrofinance suggests long-lasting effects of personally experienced outcomes on beliefs. To understand the underlying mechanism we turn to the neurological foundations of memory formation. We propose that emotional tagging plays a crucial role in assigning weights in the belief formation process. We use exposure to communism as well as variation in its emotional tagging to predict long-run beliefs. We show that living under communism has long-term effects on beliefs about its benefits. In addition, positive and negative emotional tags strongly affect the (pro- or anti-communist) direction of beliefs, providing anchors to memory that seem hard to reverse.

JEL-codes: D83 P20 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/pandp.20191051
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Citations: View citations in EconPapers (28)

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